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Govt audit: Stimulus funds for energy go unspent

WASHINGTON (AP) - Two years after the economic stimulus law, about one-third of the money authorized for an energy efficiency program has not been spent, a government audit found.

The Energy Department's inspector general said Wednesday that state and local governments have left as much $879 million unspent from a $2.7 billion program intended to boost energy efficiency and create jobs. That is a big change from a year ago, when less than 10 percent of the grant money had been spent, but is far below what the Obama administration projected when the stimulus was approved in 2009.

Inspector General Gregory Friedman said the unspent money undermines a basic premise of the stimulus law: "to promptly stimulate the economy and create jobs."

The report came as President Barack Obama prepared for a major speech on jobs Thursday to a joint session of Congress. He is considering a plan totaling about $300 billion in tax cuts and spending for 2012, people familiar with the plan told The Associated Press. The package is designed to increase consumer demand, speed up infrastructure construction and spur hiring.

The report on the DOE's energy efficiency program found that less than $1.4 billion of the $2.7 billion allocated for the Energy Efficiency and Conservation Block Grants program has been spent as of last month. Another $500 million had been committed by state and local governments but not spent, the report said.

Even so, that leaves $879 million unspent and uncommitted, a full two years after the stimulus law was approved. The program is designed to help states, territories, local governments and Indian tribes improve their energy efficiency and reduce fossil fuel emissions, through projects such as retrofitting buildings.

"Ultimately if recipients fail to utilize their Recovery Act" funding, the Energy Department should terminate the grants and return the money to the U.S. Treasury, Friedman said in the report.

The Energy Department acknowledged a slow start, but said aggressive outreach to state and local governments has boosted spending from $270 million last year to about $1.4 billion as of last month. The program has helped pay for more than 5,400 jobs.

Damien LaVera, a spokesman for Energy Secretary Steven Chu, said the department is committed to ensuring that energy efficiency and conservation block grants are spent quickly, responsibly and in concurrence with local laws and regulations.

Recipients spent more than $170 million in June, the highest one-month total in the program's history, LaVera said.

DOE chose to set aggressive milestones for recipient spending and obligations, LaVera said. As a result, the vast majority of projects funded under the energy efficiency program are on track to be completed well before the program expires in 2015.

Tim Ballo, a lawyer for the environmental group Earthjustice, said the IG report should not be seen as suggesting that the energy efficiency program is unwise. He called the program an important way to improve efficiency of older buildings and reduce waste.

While the report rightly focused on problems that occur when stimulus money is left unspent, problems also arise when money is spent too quickly, Ballo and others said. "We need safeguards," Ballo said.